Durable Power of Attorney in California
Planning for Financial Decisions During Incapacity
A durable power of attorney allows a person, known as the principal, to authorize another person, known as the agent or attorney-in-fact, to handle specified financial and legal matters on the principal’s behalf.
The word “durable” generally means the authority can continue even if the principal later becomes incapacitated. This makes a durable power of attorney an important part of a complete incapacity plan.
What Authority Can Be Granted?
The scope of authority depends on how the document is drafted. An agent may be given broad financial powers or authority limited to particular transactions or categories of assets.
Depending on the client’s needs, powers may address banking, real estate, business interests, contracts, tax matters, claims, retirement accounts, insurance, and other financial affairs. Certain powers require especially careful drafting and should not be assumed simply because a general form is used.
Immediate vs. Springing Authority
A power of attorney can be designed to become effective immediately or, in some circumstances, to become effective upon a specified future event such as incapacity. Each approach has practical advantages and disadvantages.
Immediate authority can be easier to use when help is needed, while springing authority may require proof that the triggering condition has occurred. The right structure depends on the client’s goals, family dynamics, and comfort level with the proposed agent.
Choosing the Right
Agent
A power of attorney can give substantial control over a person’s financial life. The agent should be trustworthy, responsible, financially competent, and willing to keep good records. Clients should also consider naming one or more successor agents in case the first choice cannot serve.
The financial agent does not automatically make medical decisions. Health-care decision-making is generally handled through a separate advance health care directive.
Why Generic Forms Can Create Problems
A downloadable form may satisfy basic signing requirements but still fail to address the client’s actual assets or planning objectives. Financial institutions can also have practical requirements when an agent later attempts to use the document.
Sapient Law Group helps clients define the right scope of authority and coordinate the durable power of attorney with the living trust, health care directive, business interests, and the rest of the estate plan.
